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AICPA’s Concern Over a Building Gap in CPA Exam Candidates Totally Immaterial

Yesterday, Colin stuck the following story in ANR. We're going to go ahead and give it its own spot because this is something worth discussing:

The number of New Yorkers obtaining their Certified Public Accounting license from the state remained relatively flat in 2014, according to statistics compiled by the New York State Education Department.

In 2014, 2,594 people received their license, up slightly from the 2,549 accountants certified in 2013.

The number for the past two years represents a significant drop from the 2010 total of 4,099. The first major decline came in 2011, when 3,000 accountants were certified by the state. The number of accountants dropped even further in 2012 to 2,727, which represents a 42 percent decline from the 2010 figure.

Back in December, AICPA President, CEO, and Chosen One Barry Melancon said in his "state of the profession" interview with CPA Letter Daily that the AICPA can't figure out why so many people are graduating with accounting degrees but fewer are sitting for the CPA exam, which would confirm the New York State numbers:

We have had about six consecutive years of record numbers of people majoring in accounting. That’s a great thing. For the last three years, however, we’ve basically had a level number of people taking the CPA exam. So there is a gap that’s building.

The gap is so confusing "a major research project" has started to "find out what’s causing people to sit or not sit for the exam and then design tactics to deal with it strategically." Which is code for: "throw money at the problem."

In the meantime, Xero's Jamie Sutherland wrote an article for us about someone who couldn't care less about becoming a CPA and doesn't necessarily need to based on the services he's providing to his clients. In explaining the growing CPA designation gap, he reminds us that even if fewer people are sitting for the CPA, overall brand recognition and respect is at an all-time high:

There is no question that the CPA designation is highly relevant and carries considerable cachet. After all, a CPA is who you turn to for taxes and a CPA is one of the most trustworthy designations on the planet. On top of that, the American public opinion of a the CPA brand is at an all time high as Barry alludes to in his blog.

In 2012, the number of unique candidates was 92,839. In 2011, that number was 90,644.

But then we get to 2010 and we see why Barry is trippin: 103,609 unique candidates sat for the exam that year.

I'll go ahead and float a crazy idea here, but remember that time in 2010 when everyone was freaking out about the launch of CBT-e in 2011 and the subsequent CPA exam changes that would bring? And remember how that got people who might have otherwise dragged their feet all inspired to take as many exam parts as they could before the end of 2010? Remember how a lot of those people were terrified of IFRS — which, at the time, I said was stupid to put in the exam since we don't use it — and therefore lit a fire under their own asses to get the exam out of the way before that?

Barry, I think I just solved your confusion. You're talking about a "gap" of a few thousand people a year. You're still getting growth there. Certainly not the numbers we saw in 2010 but again, that's what happens when you scare the crap out of them with major CPA exam changes. Try doing that every year and see what happens to your candidate numbers. I'm willing to guess they fall right off the cliff but hey, what do I know?

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I’ll go ahead and float another crazy idea here, but remember the massive recession that took place right after the global economy nearly collapsed in 2008? Overall unemployment skyrocketed during that recession, and teenage/young adult unemployment was even higher. Maybe more kids decided to major in accounting during that timeframe (even though they didn’t give a shit about accounting and didn’t really want to be a CPA) because they saw that path as a possible way to get a job after college and be able to pay off their student loan debt? Then the economy improved drastically (Thank You President Obama!) and many of these kids either went into other career paths or decided to make a living in the finance/accounting area where a CPA license wasn’t needed. It’s a very hot job market right now and there is a shortage of accounting talent, so one can get a job right now without having a CPA license where a license may have been necessary just a few years ago.

Just a hypothesis.

hopefulpublicaccountant

I think that is a good reason. I graduated from my undergraduate program and many people I know seem to have little to no desire to take it.

This. I do not have a CPA…cuz laziness. But at a Big 4, Senior, about to leave after this busy season. Pretty sure I can get a good paying job without a CPA, take the exams with less stress, and then be a CPA.

Management Assertion

1. The CPA exam is hard.
2. You cannot cheat like at school.
3. The average score is a failing score.
4. The average Joe Six-pack does not like to be an average failure.
5. End of explanation.

Derrick Rose

superimpose the number of EAs in the same time period…. or the number of RTRPs (lol)

thankyou

“accounting is the language of business” I laughed out loud in my cubicle from this one.

dc

Just curious. I’m not in accounting but is there any possibility that there’s a generational gap, too? Are we looking at CPAs (and possibly certifications in general) being less relevant? Or even accounting for that matter?

“Are we looking at CPAs (and possibly certifications in general) being less relevant?”

Only the CGMA.

FartDude

no.

FartDude

CGMA?

FartDude

wot?!

JavierPR

Maybe, it has to do with the requirements to get licensed. I don’t work in public so I wouldn’t know but if Big4 firms are hiring less grads every year then there are less opportunities to meet your experience requirement.